Fight for legal marijuana revenue heats up in British Columbia

WATCH: Ottawa is proposing to tax recreational marijuana once its legal on July 1. But the idea is not going over well with cities and provinces.They say they want a fair share of the revenues. Mary Griffin reports.

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Inside the Trees Dispensary, products are lined up in tidy rows. It's the first cannabis retailer to be rezoned under the City of Victoria's new rules. Spokesperson Alex Robb says they are ready for business, legal business, on July 1.

"We do anticipate a slight increase in costs after legalization as a result of the additional tax burden that is going to be laid on us," Robb said.

The federal government's plan for taxing legal pot adds up to $1 a gram, plus five percent GST. The revenues will be divided equally between Ottawa, the provinces and territories.

The federal government point person on marijuana legalization is Bill Blair, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada and to the Minister of Health.

"I'm very comfortable that the level of taxation, achieves our goals of keeping the price sufficiently low to be competitive with an illicit market," Blair said. "While at the same time not creating an incentive for the consumption and purchase of this drug."

But that is not going over well in British Columbia, a province that sees the lion's share of marijuana dispensaries. B.C. Finance Minister Carole James says this is just a starting point for negotiations with the federal government. "Well, I'm glad to see the information out. We've been waiting for that from the federal minister," James said.

"And I'm taking him at his word that this is a negotiating position. Certainly, a 50 per cent split won't work for British Columbia. And in fact, I believe won't work for any province."

In Victoria, there are currently more than 40 dispensaries. All policing, enforcement and safety issues fall to the city. That's why Canada's cities are demanding a share of the pot.
The Federation of Canadian Municipalities sent a letter to the federal finance minister, Bill Morneau asking Ottawa to cover the costs of legalizing cannabis safely and guarantee public safety.

James says the issue is too important to risk implementing poor public policy. She added public safety is a factor.

"We want to do this right. You know, B.C. has said all along, it isn't about the cash. This isn't about the money. This is about making sure that legalization, when it comes in on July 1 is done well. That we are making sure we are getting rid of the criminal element," James said.

Back at Trees Dispensary, Robb is concerned the taxation contemplated may harm customers and the industry. "I think that it's important that the government consider that there is a black market for cannabis that could continue on after legalization if they tax this product too much," Robb said.

Provincial finance ministers are meeting with Morneau on Dec. 10 to continue negotiations on pot taxation.